Category: Personal Finance

When I was paying down my debt, it felt like I was fighting for every last penny. I’ll feel so much better after my debt is gone. But then, after my debt had been paid, I looked at my paltry bank account and still felt fear. I wondered, when would I ever feel like I have enough?

Law school is billed as a “safe” bet but I’m telling you – don’t go to law school without a financial plan! When I looked at law school tuition prices recently, I was shocked. Prices have doubled since I went to school 10 years ago. And even when I was in school, the tuition prices and student loan loads were burdensome. Meanwhile, BigLaw salaries (the highest salaries a law graduate can expect when she graduates) have only increased slightly.

The rising cost of law school tuition should give any potential law student pause. My last post touched on how the rising cost of college should encourage more students to think critically before attending – and the same is true for law school.

What I hope you’ll find by the end of this post, is that even if you end up with a high salary, attending law school is a risky investment. That doesn’t mean you shouldn’t go, but you must go in with open eyes and a financial plan.

Most articles addressing whether college is worth the cost inexplicably conclude “of course!” But this doesn’t make sense based on basic economic facts – actually college is often NOT worth the cost.

Costs for four years in college average between $44,000-165,000 (public to private schools) JUST FOR TUITION. Adding minimum living costs, this could easily balloon to $84,000-$205,000 at 5% interest. The median entry-level salary for a college graduate is $48,000. Even entry-level salaries at the high end are $71,000 (pre-tax).

The best case scenario (assuming no financial aid) is spending $84,000 and four years of hard work on college, likely not learning relevant job skills, in order to qualify for, apply for, and get hired to work a job that will take you, 40+ hours a week for 52 weeks in order to earn $50,000 after taxes to pay off your loans (and you might not even like this job). The worst case scenario is that you spend $200k in loans to attend college and end up at a job you could have gotten straight out of high school.

Finally, people have a lot of fond memories for their colleges, clouding their rational judgment. But colleges do not care about you.

If ever there was a sign that no matter how much money you give colleges, they do not care one lick about you, your health, your career, or your life, it’s how they treated their own students during the pandemic. Because of the COVID-19 Pandemic – students are questioning the value of a college education more now than ever before. College students say that online classes aren’t worth the high cost of college. And colleges, for their part, do not care. They unceremoniously kicked their students out of their dorm rooms – rooms that these students paid for in advance, forcing students who may have contracted coronavirus over spring break to travel in crowded airplanes and trains during a pandemic likely infecting themselves and the rest of the nation including their potentially elderly parents or grandparents, and refused to give exemptions to many students who had nowhere to go. (Also how embarrassing to be a student who has to explain a bad family situation to a random administrator just so she won’t be homeless).

I know people are going to disagree with me, but kicking college students out of their dorms is no different than kicking people out of their apartments. It’s not that the colleges cared about their students’ safety – the colleges just wanted to avoid liability.

Even with millions or billions in their endowment funds and hundreds of six-figure salaried administrators, college students were forced to figure their way home by themselves. College students and alumni raised money to help, which is wonderfully heartwarming, but good god schools, have you no shame?

Going to college could be the single worst financial decision of your life, and here I will tell you why.

Being single seems like it would be an impediment to advancing in your career. For instance, a significant other can halve your chores and expenses and provide advice and support – clear benefits. For me though, being single helped advance my career. It turns out that my experience is typical for highly educated women professionals. Here are 8 ways being single can help a women’s career (or how being married/coupled can hurt it) and my experience navigating these obstacles.

What counts as an emergency?

According to Vanguard, an emergency fund is a stash of money set aside to cover the financial surprises life throws your way. A number of people commented that one shouldn’t use an emergency fund to attend a wedding because a wedding “obviously did not fit the definition of emergency.” But, as a lawyer, I have to say, it depends.

an unforeseen combination of circumstances or the resulting state that calls for immediate action

So does a last minute destination wedding count as an emergency? Some people say a wedding is not unforeseen or does not require immediate action. But this year, I’ve attended four weddings, three were destination weddings and all four occurred between three to eight months after the engagement. For a destination wedding, given that kind of notice, I needed to buy a plane ticket quickly. It’s hard to start saving money for a significant purchase in a few weeks (especially assuming you couldn’t save prior to knowing about the wedding).

[As a side note, my comments section asked what jerks have short-notice destination weddings. My friends are wonderful thoughtful people. As people get older, they want to get the wedding done ASAP and their friends and family can’t necessarily plan a year in advance. The weddings were in the most convenient locations for the most relatives, particularly the elderly ones. So though it’s a destination wedding for the bride and groom and for me, it’s the closest one for a majority of the guests. And finally, it’s an invitation, not a subpoena! I have the choice to say no. I chose to go.]

So I think last minute destination weddings can meet the definition of “emergency.” But what does that matter if you value having the money in your account more than going to a last minute destination wedding?

Your Definition of Emergency Will Vary (And It’s Ok)

A number of commenters noted that they prefer to have separate savings accounts for unexpected good things. I mean, yeah, if you have a wedding fund, take the money out of that instead of the emergency fund. Duh. But let’s say you only have one batch of savings and you call it emergency savings. If there’s enough money to carve out a section for wedding savings, that’s the same thing as having a separate wedding fund. So there’s no real reason to get angry at someone for dipping into their emergency funds when there’s enough money to get everything done.

If all your savings in the whole world equals the amount you would spend on this wedding, then yes, that’s a risky idea. But you are entitled to make that risky choice.And it might be a rational choice. As much as personal finance bloggers talk a big deal about preparing for once-in-a-lifetime doom and gloom moments, sometimes once-in-a-lifetime happy events turn up on your doorstep. I think, for most people, unexpected happy events are more likely to occur than the worst case scenarios.

There is a chance that you will lose your job and your life will collapse all at the same time. There is also a chance that you will miss out on all sorts of fun events and the worst never happens. And even if the worst happens, it’s ok to believe that you’ll be ok and find a way that doesn’t mean your life is an utter disaster.

But if you prefer to have the money in your emergency fund and never use it, you are entitled to make that choice too! When we think of emergency funds, we have to think of what we value, the odds that the worst will happen, and most importantly, what we are most comfortable with.

My Emergency Fund

I don’t have an emergency fund anymore. When I had just started working, I squirreled money away in case of an emergency. And that money started to accumulate until I had saved the recommended 3 months. 6 months. 9 months. That was quite a bit of money sitting in a savings account. And not that I was complaining, but I barely dipped into it.

I was steadily employed. My car was 13 years old, and lasted for 5 years after that, and then I went car-free for 3 years after that. My laptop was 4 years old, but lasted another 3 years, and actually buying another laptop wasn’t that expensive. I had an unexpected medical emergency but that didn’t cost as much as I expected it to. So I just had a bunch of money sitting around.

Meanwhile, I was also saving in my 401k and my Roth IRA. I had paid off my loans. And I got to thinking, let’s say I lost my job. I wouldn’t need all of the money immediately – I would only spend it one month at a time. If I lost my job, I would get a 0% interest credit card to float me for a year, and even if I lost my job during a recession, I would have that year to liquidate a month or a few months of stocks assuming I didn’t get another job for over a year. And I don’t have any dependents or a mortgage, so worse to worse, I could drastically reduce my lifestyle rather quickly. And there’s also the possibility that I wouldn’t lose my job and that I would have missed out on all the dividends and growth from keeping my tends of thousands earning 1% in a savings account for years.

So I started moving money from my emergency fund into my investment accounts and I haven’t looked back. This is a bit of a moot point now because I quit my job in February without pre-planning. The stock market is booming and I’m happy that I’ve let my money grow over the years. That was the choice that I was the most comfortable with.

Conclusion

What’s an emergency fund? It’s the savings you have to give yourself peace of mind in light of the existence of unexpected events. It can be any amount, and it can go up or down. You can dip into it for any kind of unexpected event and you shouldn’t have to answer to anyone else about what constitutes an “emergency.”